Analysis: Macau’s gambling revenue drops while Las Vegas remains strong

The VIP gambling rooms at the MGM Resorts International in Macau, a small gambling heaven 64km from Hong Kong, shut down recently. Dore Entertainment followed suit and announced it would close two VIP rooms at Wynn Macau at the end of 2015. According to The Wall Street Journal, Macau saw VIP gambling revenues decline by 44 % in 2015, and mass-market gambling drop by 22 %. With Chinese population figures exceeding those of the US, the question arises why, in contrast to Macau, Las Vegas remains strong in terms of revenue.

The Chinese government’s crackdown on corruption is frequently cited as one reason for gambling revenue plummeting in Macau. It has deterred Chinese professionals from playing at the gaming complexes, which were built at high costs, after the Chinese government de-monopolised the gambling industry in 2002 and allowed private operators, including Wynn Resorts and Las Vegas Sands, to enter the market. The crackdown, coupled with a general economic downturn, and subsequently, fewer mass-market players (tourists so-to-speak) visiting casinos, has led to Macau being at its least lucrative in years, claim analysts. The absence of Chinese players has reportedly had an impact on business in Las Vegas.

This impact is comparatively minuscule. Las Vegas continues to attract the majority of casino players worldwide.

A study by GLS research revealed that 19 % of visitors to Las Vegas were foreign nationals in 2014, 99.6 % of visitors stayed overnight, 71 % gambled, and had an average gambling budget of $530.11 set aside for gambling alone.

In light of these figures, it is reasonable to assert, that Las Vegas attracts both professional casino players and regular tourist, which frequently stop by Las Vegas on a West Coast tour. In 2014, the story of Walter and Linda Misco from New Hampshire, who won $2.4m in a Vegas slot machine, made news internationally.

Las Vegas: Brand as Mythology

The Miscos made the news due to the journalistic value a story about an average American couple, to whom something unusual happened, has. Readers can identify with the protagonists. Crucially though, it was important for the story that this happened in Las Vegas. Without this, the story could have been one of many other stories about lotto millionaires, which do not get published beyond the local press.

Ever since the 1960s, Las Vegas has mythified its reputation, with the help of TV makers, novelists and other flamboyant personalities. Among the most significant, and fictional representations of Las Vegas, are Hunter S. Thompson 1971 novel Fear and Loathing in Las Vegas, and in more recent years Steven Soderbergh’s 2001 movie Ocean’s Eleven or Todd Phillips’ The Hangover.

It is this fiction that, together with the popularity of America’s West Coast, in particular, the nearby Grand Canyon, keeps Las Vegas booming. Macau is currently trying to diversify its economy and could profit from its attractive countryside, rich colonial heritage and Taoist history – if it markets itself effectively.